Is Egypt Governable?

By David P. Goldman, JINSA Fellow

The Obama administration is baffled by the Egyptian government’s response to the Sept. 11 attack on the American embassy in Cairo. It took President Mohamed Morsi two days to denounce the assault on the embassy, and even then he placed the blame on a hitherto unnoticed clip posted on YouTube rather than on the attackers. For two days after the flag-burning, Egyptian security was absent while demonstrators threatened the embassy. “A single security vehicle was imaged making an occasional and completely feckless foray through the gathering area, during the early morning of 13 September in Cairo. No Egyptian police or military or other security personnel were present,” the Nightwatch letter observed Sept. 13. The Muslim Brotherhood called for mass protests against the Youtube clip, albeit “peaceful” ones.

Morsi’s behavior raises questions about Egypt’s governability. On the face of it, his actions seem puzzling. Washington has done everything possible to reach out to the Muslim Brotherhood. It called loudly for Hosni Mubarak’s resignation when protests erupted in early 2011. It invited Brotherhood representatives to the White House last April, before Egypt’s presidential elections. It backed Morsi’s August 12 cold coup against the Supreme Council of the Armed Forces and the firing of Gen. Tantawi and the old guard of the Egyptian military, and embraced Tantawi’s successor Gen. El-Sisi, a Brotherhood member.

The White House said nothing when Morsi traveled to Iran in late August, breaking Iran’s diplomatic isolation, believing (as the Council on Foreign Relations’ Steven Cook put it) that Morsi would be a “better interlocutor” between Washington and Tehran. And it offered $1 billion of American aid, in the form of loan forgiveness and new credits, as well as backing for a $4.8 billion loan from the International Monetary Fund. Secretary Clinton Sept. 13 bent over backwards to placate Islamist sentiment, calling the YouTube video “disgusting and reprehensible.”

Indeed, the Obama administration is so deeply invested in the notion that the Muslim Brotherhood embodies the future of Islamic democracy that the imagination strains to identify a circumstance that might persuade the White House to abandon its support for the new Egyptian regime. The loyalty that President Obama and Secretary of State Clinton evince for the Muslim Brotherhood recalls the zinger that concludes “Some Like It Hot,” when Joe E. Brown tells a drag Jack Lemmon, “Nobody’s perfect.”

Why, then, would President Morsi bite the hand that is trying to feed it? His undisguised contempt for American perceptions and neglect of diplomats’ security are a profound embarrassment to the White House, and fodder for Obama’s opponent in the presidential election. Morsi has made it harder, if not outright impossible, for Obama to deliver the proffered aid package, which Egypt desperately requires.

The answer well may be that no one can govern Egypt. Even Islamists have to eat. Since the fall of Mubarak the country’s foreign exchange reserves have fallen from $35 billion to $15 billion, but less than $7 billion of that sum constitutes liquid and spendable cash-less than two months’ worth of imports.

Egypt’s economy has begun to break down. Al-Ahram reported Sept. 12 that Upper Egypt now suffers a 30% shortage of diesel fuel. The newspaper wrote, “Egyptians started feeling another diesel crisis at the end of last week, with amounts available shrinking and prompting lengthy queues at stations. A shortage of liquidity in the Ministry of Petroleum has delayed payments to refineries that provide the crude needed to produce diesel. ‘The Finance Ministry is late delivering the required funds to the Ministry of Petroleum,’ Hossam Arafat, head of the division of petroleum industries at Egypt’s Chambers of Commerce, explained. The total daily supply of diesel on the Egyptian market has fallen to 33,000 tonnes from 40,000, press reports estimate.”

Egypt’s fuel suppliers stopped giving the country credit in late August. The London Independent commented Aug. 23, “The petrol shortage might detonate what analysts believe is a ticking time bomb involving the lavish fuel and food subsidies which the government uses to drive down prices for ordinary Egyptians. Hampered by piecemeal growth and reliant on high risk lenders, Mohamed Morsi may find it impossible to justify the decades-old subsidy system, which costs the government £10 billion a year and devours a fifth of the overall budget.”

The Wall Street Journal reported March 22, “Subsidies already absorb at least 28% of Egypt’s budget outlay of 476 billion Egyptian pounds ($79 billion). About two-thirds of that goes toward fuel and energy, with the rest aimed at reducing food prices, particularly for wheat.” As it runs out of money, the Morsi government has no choice but to cut subsidies.

After 60 years of feckless military rule, Egypt’s economy simply can’t get there from here. The country imports half its caloric consumption, although three-fifths of its people are engaged in agriculture. Its university system can’t train a competent civil engineer (President Morsi, like almost all of Egypt’s prominent engineers, studied abroad). Forty-five percent of its people are functionally illiterate. Nine-tenths of its women suffer genital mutilation, and nearly a third of Egyptians marry cousins.

The Obama administration believed that Egypt would obtain emergency funding from Saudi Arabia, but President Morsi came away empty-handed from his mid-August trip to Riyadh. Apparently the Saudi monarchy, which views the Muslim Brotherhood as its prospective gravedigger, decided not to donate the rope to the hangman. The Emir of Qatar announced a $2 billion donation during his Aug. 12 trip to Cairo-coincidentally the same day that Morsi purged the generals-but only $500 million has been paid in so far. Qatar has only $20 billion of total reserves and cannot carry Egypt on its own.

Morsi has no choice but to impose harsh austerity on a country where roughly half the population subsists on less than $2 a day. According to the Egypt Independent, “The government decided to lower subsidies on oil products from LE95.5 billion [US$$15.5 billion] in the 2011-2012 budget to LE25.5 billion in the 2012-2013 budget by applying a coupon system on butane, gas and diesel in addition to other procedures for rationalizing energy consumption.”

The Egyptian government has already called for electricity rationing after a succession of power failures during the summer, and some Egyptian economists predict that the government will substitute ration cards for food subsidies.

That is an opportunity for Morsi to consolidate power-a government that determines who eats or cooks or drives by issuing ration cards has life or death power over a poor population-but it is also a very dangerous one. Morsi’s government is new, and it is taking enormous risks by imposing a brutal belt-tightening on a poor and long-suffering people.

Even Islamists have to eat. Some senior Israeli policy analysts believe that Morsi will do everything possible to distract the Egyptian people from the growing misery of their material circumstances. Morsi may attempt to justify an Egyptian annexation of oil-rich Libya, and might fight Sudan for control of the Nile’s limited water supply. And he may encourage Islamist extremists to vent their frustrations against the United States.

This is a dangerous policy, but perhaps a tragic one, in the classic sense of the term: Morsi may pursue a destructive and self-defeating course because circumstances compel him to do so. The dissonance between the reality on the ground in Egypt and Washington’s narrative has already become grating. In the coming weeks it is likely to become intolerable.

David P. Goldman, JINSA Fellow, writes the “Spengler” column for Asia Times Online and the “Spengler” blog at PJ Media. He is also a columnist at Tablet, and contributes frequently to numerous other publications.